Government's fiscal reform package wins approval
The lower house of Parliament on Tuesday passed a package of fiscal, welfare and healthcare reforms aimed at cutting the country's steep budget deficit and preparing it for euro-zone entry. It was a major victory for the ruling centre-right coalition which has only a slim majority in the lower house.
"This is the first step not just towards healing the country's public finances but in addressing all the problem-areas of life in the Czech Republic," the Prime Minister said minutes after the crucial vote. The reform package which significantly cuts income taxes while rising indirect taxes is expected to make the Czech Republic a more attractive environment both for wage earners and corporations.
The opposition has also stated its intention to file a complaint against the reforms with the Constitutional Court on the grounds that the introduction of medical fees violates the Constitution. However that depends on the interpretation of the Constitution and legal experts say the complaint may be rejected. As for the fiscal reform package, it is expected to pass through the Senate without a hitch since the Civic Democrats have a comfortable majority in upper chamber. And President Vaclav Klaus has already said he will sign the bill into law. If all goes according to plan most of the changes will take affect on January 1st of 2008.